Yesterday, Bitcoin experienced a major breakout through $12,000 and in a flash was trading above $13,000. Buying on exchanges is picking up, which is, in turn, driving up prices.
However, a “massive” wave of OTC buying suddenly could also be contributing to the bullish impulse. Here’s how.
Bulls Push BTC To New 2020 High, Is The Post-Halving Bull Run Here?
The first-ever cryptocurrency is trading just below $13,000 after a strong bullish impulse and $1,000 candle took the cryptocurrency charging higher.
News that PayPal would introduce cryptocurrencies to its customers starting immediately and roll out full payment support for merchants in 2021, caused buyers to step in with strength.
Sellers attempting to short Bitcoin as it rocketed higher only served as fuel for a short squeeze that ultimately took the cryptocurrency to a new 2020 peak.
Signs point to a new bull run beginning, but volume has yet to arrive that will support a full push to retest $20,000. The reason for the lack of volume, while Bitcoin price increase steadily, could be due to another factor going on behind the scenes and off crypto exchanges.
How OTC Bitcoin Buying Could Be Contributing To Price Increase
According to Bitcoin’s Exchange Fund Flow Ratio 30-day moving average, OTC buying of Bitcoin has kicked into high gear, and it could be sucking the already scarce supply out of the market.
With less supply available, both due to OTC buyers absorbing what’s available in BTC and retail investors moving BTC off exchanges to hold in cold storage, there’s not enough Bitcoin for buyers on exchanges to buy big without driving up prices.
And that’s exactly what happened yesterday. What buying in Bitcoin took place as a result of the breaking PayPal news, helped the cryptocurrency skyrocket higher due to the surging demand.
OTC buying happens behind the scenes or “over-the-counter.” The medical-sounding term lets big buyers access large BTC supply without causing market slippage on exchange.
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Buyers do this to avoid driving up prices, much like what took place yesterday. But although OTC buyers don’t directly impact price fluctuations, taking large sums of the BTC supply out of the marketplace will still ultimately contribute to supply and demand dynamics.
These dynamics are been tipping the scales in favor of price increase, and it shows. If the trend keeps going, Bitcoin’s bull run could already be here, and the cryptocurrency might never look back from the levels it just left.
Featured image from Deposit Photos, Chart from CryptoQuant, TradingView.com